- TARP Life II
- June 3, 2009
- Law Firm: Blank Rome LLP - Philadelphia Office
The news last week that six insurance companies had been preliminarily approved for TARP money was viewed as the culmination of a process that began under the Bush Administration through which insurers sought assistance from the Federal government. In the six months since they initially applied for TARP funds, the companies' ardor for this sort of federal investment seems to have cooled somewhat.
The insurance companies approved for TARP money are being consistently cautious about accepting it. One, Ameriprise Financial, announced it would decline the funds. The others -- Prudential, Hartford, Lincoln National, Principal, and Allstate -- released statements to the effect that they are still evaluating their options.
The companies’ reactions could be viewed as a positive sign that, unlike in November when they submitted their applications, there are now alternatives to the TARP for raising capital. It may also be that companies are wary of getting too entangled with the government in light of issues surrounding executive compensation and business structure that have been faced by banks and auto companies who have taken federal assistance. In any case, it may be that they will view it as sign of strength to turn down assistance from Washington. While Treasury Department officials might see that as a "bait and switch" strategy, the companies have a legitimate case to make that things have changed between November and now.